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Party On? Third Party Liability and a Condo’s Party Room

For St. Patrick’s day weekend we have a post about alcohol! Daniel Brockenshire, a law student at Sutherland Kelly LLP, greatly assisted with the research and writing of this post. Thanks, Daniel!

Condominiums are required to have insurance coverage for liability claims related to property damage or bodily injury suffered by others on common elements. Some condominiums may even have purchased additional “loss assessment coverage” for major property damage or liability on the common elements.

But what about a scenario where unit owners/occupants or guests are served alcohol in a condominium’s common elements party room, leave intoxicated, and then injure a third party?

Author’s Note: this post relates to a potential scenario. To the best of my knowledge, the Ontario courts have not released a decision about issues of social host liability and/or occupier’s liability involving third parties that arise from serving alcohol in a condominium’s common elements “party room”.

Social Host Liability

First, a bit of context, the leading case on social host liability remains the Supreme Court of Canada decision in Childs v. Desormeaux (2006).

A brief summary of the facts: a couple hosted a “bring your own booze” (BYOB) New Year’s party, where a guest drank excessively, but, the hosts were unaware and there wasn’t evidence that they served him drinks. The guest left the party, drove his vehicle while intoxicated and collided with another vehicle carrying four occupants, killing one occupant and seriously injuring the other three.

The court said that simply hosting a private party where alcohol was served did not mean that the hosts were liable to the third party motorists for injuries caused by the guest. As a general rule, this means social hosts are not responsible for a guest’s actions or injuries caused to a third party, once the guest leaves the party, unless, the host(s) actively contributed to the event(s) that caused the third party injury. The court also said a private social host isn’t expected to monitor the behaviour of all guests on behalf of the public.

However, Childs v. Desormeaux did not address the issue of third party liability if a social host were to continue to serve (overserve) alcohol to an intoxicated guest. The court left it open for judges to find a social host liable to third parties where the circumstances are more egregious, such as where a host overserves a guest and encourages him to drive home instead of finding him an alternate way home.

Hosting social events and holiday parties in a condominium’s party room could expose the condominium and/or owner to liability if alcohol is served to an intoxicated guest who leaves and injures a third party.

Occupier’s Liability

Condominiums should also be aware of their liability for the party room according to section 26 of the Condominium Act, 1998, which states:

For the purposes of determining liability resulting from breach of the duties of an occupier of land, the corporation shall be deemed to be the occupier of the common elements and the owners shall be deemed not to be occupiers of the common elements.

This could arise in situations where a unit owner or occupant is using the party room for a private function where alcohol is being served.

What’s a Condo to Do?

We mentioned at the outset that a third party liability case arising from serving alcohol in a common elements party room has yet to come before the Ontario courts, but the potential for a condominium to be found liable exists. As such, we recommend that boards and managers:

1. Review the condominium’s declaration, by-laws, and rules to determine if any provisions assign responsibility to the unit owner using the party room.

2. Look into creating a party room use or rental agreement for unit owners using the party room. Preferably, the agreement would have provisions that:

Limit the types of events (i.e. bachelor parties, stag and does) or activities (i.e. beer pong or other drinking games);

Limit the number of guests and impose a minimum age (i.e. 19) for guests;

Transfer liability to the unit owner hosting the event;

Require the owner to ensure that servers have Smart Serve Ontario certification, or require guests to serve themselves (i.e. like with a BYOB);

Require the owner to provide security for the event; and

Require the owner to provide a security deposit to cover possible property damage or clean-up costs.

3. Review the condominium’s insurance policy for any relevant exclusions.

4. Talk to the condominium’s insurance broker about possible add-ons for social host liability and best practices to avoid social host liability.

5. If there are still concerns about social host liability, talk to the condominium’s lawyer about other options, such as prohibiting owners from hosting events with alcohol on the common elements.